The big four's claims of rising funding costs has been rubbished by a major French bank.
The major banks have pointed to higher funding costs for their recent rate hikes, but Fairfax has reported that Societe Generale Asia Pacific head of interest rate strategy Christian Carrillo has called the claim "almost mathematically impossible".
According to Fairfax, Carrillo dismissed the majors' claim in a recent research note.
"The claim that the recent increase in mortgage rates is due to higher funding costs is very dubious. The mortgage hikes seem aimed at protecting their higher profit margins," Carrillo wrote.
Carrillo instead argued that nearly all sources of funding for Australian banks are less expensive that their post-GFC highs and have contunued to fall in absolute terms since the second half of 2011.
"Australian banks are essentially an oligopoly. They control most of the market anyway. They can effectively set rates where they want to," he said.
Australian Bankers' Association CEO Steve Munchenberg dismissed Carrillo's research, saying it lacked specific bank funding models.
"I would be surprised if he had access to the detailed funding of the banks on a bank-by-bank basis. You can't just look at the continuum of prices and average that out, because the banks tap the market at different times," he told Fairfax.